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Fundamental
High Water Mark
For performance fees; manager only earns on new highs
Definition
High water mark prevents hedge fund managers from earning performance fees on recovered losses. Managers only earn fees on returns above the previous peak value. It aligns manager incentives with investor interests.
Related Topics
#performance fees
#hedge funds
#incentive alignment
#loss recovery
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Category: Fundamental
Fundamental analysis examines a company's financial health, management quality, and market position to determine intrinsic value.
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